Corporates seeking better facilities/higher credit from Banks often approach different lenders for sanction of credit facilities. Central Vigilance Commissioner observed that sometimes existing accounts with one bank already showing signs of sickness are taken over by another bank and such accounts predictably turn NPA within a short time. To arrest unethical/unjustified practice of takeover of accounts, Department of Financial Services, Govt. of India has issued the following guidelines to all Banks.


Ø  For taking over of any accounts, Banks must put in place, a Board approved Policy with regard to take over of accounts from another Bank and the same should be incorporated in the credit policy of the Bank.

Ø  Normally, the accounts having ratings above the level approved by the Board should only be taken over and the concessionary facilities should be extended only in extremely deserving cases with specific reasons recorded in writing.

Ø  In all cases of takeover of accounts, it is necessary to do proper due diligence including visit to the premises of the customer, if needed, before the account is considered for takeover by the bank.

Ø  The guidelines of joint lending should be strictly applied in all cases where the borrower seeks to have additional exposure from the bank after taking over the account.

Ø  No cases should be taken over by a Bank from any Bank where any of its ED or CMD had worked earlier. In case, any such cases need to be taken over, the proposal will need to be put up to the Board with specific reasons justifying the need for taking over the accounts.

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